E-commerce firms not building a loyal customer base: Panellists at ETRetail Forum

E-commerce is not capitalising on the ease of comfort of shopping which it is meant to do. Rather it is capitalizing only and only on the ease of discounts at the moment.ETRetail | Updated: July 04, 2016, 16:14 IST

New Delhi:No e-commerce player has been able to create a loyal customer base for itself since most online retailers are riding the discount wave, said panellists at the recently concluded ETRetail Forum held in Delhi in association with Microsoft Dynamics and KPMG.

“All such models (e-commerce), they are not building a clear loyal customer base. All they are trying to do is building a customer base which is looking for discounts. These customers have certainly no e-commerce brand loyalty. They are there for the the right kind of deals that they get and will happily move to any brand that is offering best discounts,” said Pushpa Bector, executive vice president at DLF Mall of India.

Rajesh Jain, managing director of French Lifestyle brand Lacoste said that e-commerce in India is not doing things that e-commerce is supposed to do. Discounting is not the true purpose of online shopping as it is in India, he said.

“E-commerce is not capitalising on the ease of comfort of shopping which it is meant to do. Rather it is capitalizing only and only on the ease of discounts at the moment,” Jain said. “But once these discounts go away and more aesthetic aspects of online shopping, which is comfort and ease takes over, the real sense and experience of e-commerce will prevail,” he said.

Adil Vazifdar, partner at consultancy firm KPMG, agreed with Jain that discounts are the primary reason for Indians to shop online but he said that this will not always be about discounting as customers’ mindset has started to change.

“It is true that more than 80 per cent of the online shoppers look for discounts while making the purchase but what has started happening now is that a set of consumers have emerged who are also looking at the convenience and ease factor of the e-commerce and not the discounts,” Vazifdar said. “Yes, these consumers are less but once people start getting habitual to the online shopping and discounts will start to taper, it will be the convenience factor that will drive the sales,” he said.

Although the panelists were of belief that discounts will gradually come to an end, Lalit Agarwal, chairman of V-Mart Retail, expressed doubts about the transition from discounted model to convenience led model.

“The way they are burning your cash, what is the cost of that transition? Can they afford that cost? How long can they afford that cost? And the base model that we are building today is based purely on discounts. So how would they sustain without discounts? And the moment the e-commerce players stop giving the discounts, I think they will start seeing the difference in the consumer buying behaviour. It will go down,” Agarwal said.

According to Tinku Singh, group president and chief strategy officer at SRS Group, if e-commerce players stop discounting all of a sudden, their valuation and their cash inflows will immediately stop.

“So it has to be done over a period of time. I think, signs are already there, and it’ll take maximum a year or so and the discounts should start slowing down if not come to a complete halt,” Singh said.

Talking about the importance of technology in bricks-and-mortar retailing, panelists said that it is of utmost importance to be relevant today but also warned of the overuse or depending heavily on it.

Jain said the word ‘technology’ has been blown out of proportion. "At the end of the day technology is just a means and not an end. But we all have started talking about technology in such a manner as this is what we have to achieve, and after that everything will be achieved," he said.

Vazifdar said that the element of risk in the business is very high as companies start moving towards the digital channels and this is something that most organisations today are aware of. They accept and understand that it is a huge amount of risk since a huge amount of user data and information are flowing through these channels and there is always a risk of getting hacked and exposed, he said.

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